The natural gas market should be setting a final seasonal low for 2014 in upcoming trade if it hasn't already been set.
Once the market does bottom, a seasonal rally back higher into early-2015 is expected.
natural gas
Tuesday, September 2, 2014
Natural Gas Seasonal Price Trend Update
The natural gas market should be setting a final seasonal low for 2014 in upcoming trade if it hasn't already been set.
Once the market does bottom, a seasonal rally back higher into early-2015 is expected.
Natural Gas Update - Hedge Funds Adding To Long Positions In The Market
Hedge funds have been adding to existing long positions in the natural gas market over the past two weeks.
The fund combined long position in June was just above 395,000 contracts (futures only) as the market set the summer high.
During the subsequent sell off from the June high which erased nearly 25% of market value over the following 6 weeks, hedge funds were liquidating.
The speculative long position by the funds bottomed out 200,837 contracts two weeks ago but has since climbed to 215.342 contracts according to last Friday's Commitment of Trader's report.
The hedge funds will likely be buyers of natural gas over upcoming weeks attempting to play the typical seasonal rally higher during the winter months.
The current long position is neutral-bullish for natural gas as the funds have plenty of room to add to long positions as needed.
Dow Jones - Largest Sell Off In 6-Months Today In Natural Gas
DJ Sizzle Fizzle Sends Natural Gas Reeling -- Market Talk
15:01 EDT - Natural-gas futures post their biggest daily percentage drop in 6 months as forecasts for a hoped-for
late-summer heat wave moderate. Utilities use gas to generate electricity, and demand was expected to rise as people
cool homes and offices. But the latest forecasts show temperatures returning to their temperate state across much of
the US after this week. Meanwhile, robust production in the coming weeks is expected to create adequate supplies by the
start of fall heating season. Nymex October natural gas skidded 4.3% to $3.89/mmBtu, the lowest settlement since Aug.
22. (christian.berthelsen@wsj.com)
(END) Dow Jones Newswires
September 02, 2014 15:01 ET (19:01 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
090214 19:01 -- GMT
------
15:01 EDT - Natural-gas futures post their biggest daily percentage drop in 6 months as forecasts for a hoped-for
late-summer heat wave moderate. Utilities use gas to generate electricity, and demand was expected to rise as people
cool homes and offices. But the latest forecasts show temperatures returning to their temperate state across much of
the US after this week. Meanwhile, robust production in the coming weeks is expected to create adequate supplies by the
start of fall heating season. Nymex October natural gas skidded 4.3% to $3.89/mmBtu, the lowest settlement since Aug.
22. (christian.berthelsen@wsj.com)
(END) Dow Jones Newswires
September 02, 2014 15:01 ET (19:01 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
090214 19:01 -- GMT
------
Natural Gas Update - Weekly Chart Trend Line Resistance Holds Last Week - Bearish
The weekly chart for the spot natural gas contract shows the resistance level reached in last week’s trade. This resistance was a former trend line that was broken as support in mid-July near the 4.000 level.
After breaking under trend line support, the market fell a 3.724 low before bottoming in early-August.
The rally higher from the August low topped out last week at a 4.101 high basis the October 14 contract holding below trend line resistance.
The inability to rally the market back over former trend line support was a bearish technical signal which has been followed by selling early this week. This sell off has dropped the market back into a sideways range that now enters into a 7th week.
A breakout and close above the weekly trend line at last week’s 4.101 high is needed to turn the longer term trend back higher.
Dow Jones - Morning Natural Gas Commentary
DJ Natural Gas Slides as Forecasts for Hot Weather Fade
By Christian Berthelsen
Natural-gas futures slipped Tuesday as late-summer forecasts for hot weather turned more moderate, tamping down
expectations for gas-fired cooling demand.
Natural gas for delivery in October was down 9.4 cents, or 2.3%, to $3.9710 a million British thermal units on the
New York Mercantile Exchange. If prices stay at that level throughout the session, it would be the first settlement
below $4/mmBtu in a week.
Futures were on a tear in the last month, rising 5.8% as additions to inventories came in lower than expected and
forecasts finally turned hotter after a temperate summer, which kept air-conditioning usage low. Utilities use natural
gas to run electricity plants and demand rises with the thermometer in the summer as homes and businesses power up to
cool down.
But the latest forecasts show the late-season heat wave may be shorter-lived than previously expected.
Forecasters said temperatures will be normalizing in the next two weeks, with summer heat only remaining in the
South, the Southeast and the West Coast.
"As quickly as the late hot summer weather rolled into major portions of the U.S., it is now quickly rolling out,"
Energy Management Institute analyst Dominick Chirichella said in a note.
With hurricane season on the way, traders have been watching tropical storms off the coast to see if they would
develop into a threat for the U.S., which could drive price gyrations as storms have the potential to disrupt
production. But the first of the storms forming in the Gulf of Mexico is expected to make landfall in Mexico and not
impact the U.S.
"There were several tropical waves over the Atlantic and Caribbean that were weak but worth watching,"
Natgasweather.com said in a note. The Gulf storm, it said, will likely develop into "nothing more than a disorganized
cluster of showers and thunderstorms."
In the physical market, cash prices for next-day delivery at the benchmark Henry Hub last traded at $4/mmBtu,
compared with Friday's range of $3.99 to $4.08. Cash prices for next-day delivery at the Transco Z6 hub in New York
traded in a bid-ask range of $2.70-3.15/mmBtu, compared with Friday's range of $2.44-$2.55.
Write to Christian Berthelsen at christian.berthelsen@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwireshttp://online.wsj.com?mod=djnwires">http://online.wsj.com?mod=djnwires
>
(END) Dow Jones Newswires
September 02, 2014 09:41 ET (13:41 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
090214 13:41 -- GMT
------
By Christian Berthelsen
Natural-gas futures slipped Tuesday as late-summer forecasts for hot weather turned more moderate, tamping down
expectations for gas-fired cooling demand.
Natural gas for delivery in October was down 9.4 cents, or 2.3%, to $3.9710 a million British thermal units on the
New York Mercantile Exchange. If prices stay at that level throughout the session, it would be the first settlement
below $4/mmBtu in a week.
Futures were on a tear in the last month, rising 5.8% as additions to inventories came in lower than expected and
forecasts finally turned hotter after a temperate summer, which kept air-conditioning usage low. Utilities use natural
gas to run electricity plants and demand rises with the thermometer in the summer as homes and businesses power up to
cool down.
But the latest forecasts show the late-season heat wave may be shorter-lived than previously expected.
Forecasters said temperatures will be normalizing in the next two weeks, with summer heat only remaining in the
South, the Southeast and the West Coast.
"As quickly as the late hot summer weather rolled into major portions of the U.S., it is now quickly rolling out,"
Energy Management Institute analyst Dominick Chirichella said in a note.
With hurricane season on the way, traders have been watching tropical storms off the coast to see if they would
develop into a threat for the U.S., which could drive price gyrations as storms have the potential to disrupt
production. But the first of the storms forming in the Gulf of Mexico is expected to make landfall in Mexico and not
impact the U.S.
"There were several tropical waves over the Atlantic and Caribbean that were weak but worth watching,"
Natgasweather.com said in a note. The Gulf storm, it said, will likely develop into "nothing more than a disorganized
cluster of showers and thunderstorms."
In the physical market, cash prices for next-day delivery at the benchmark Henry Hub last traded at $4/mmBtu,
compared with Friday's range of $3.99 to $4.08. Cash prices for next-day delivery at the Transco Z6 hub in New York
traded in a bid-ask range of $2.70-3.15/mmBtu, compared with Friday's range of $2.44-$2.55.
Write to Christian Berthelsen at christian.berthelsen@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwireshttp://online.wsj.com?mod=djnwires">http://online.wsj.com?mod=djnwires
>
(END) Dow Jones Newswires
September 02, 2014 09:41 ET (13:41 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
090214 13:41 -- GMT
------
Natural Gas Technical Update - Heavy Selling In Early Trade Today
The October 14 natural gas contract rallied up to a new 6-week high of 4.101 in last Thursday’s session but couldn’t extend the gains on Friday.
The contract instead posted a bearish inside range reversal (harami candlestick) bar on Friday which has been followed by heavy selling in the overnight session.
Last week’s 4.101 high is technically important as it held below former trend line support on the weekly chart which was broken in mid-July. The inability to rally back over this former support was a bearish signal for the market.
The October contract closed Friday’s session at 4.065, up .182 or 4.7% for the week. Much of last week’s gains have been erased in early trade this week as the October contract is currently trading just above 10 and 40 day moving average supports between 3.945-3.960.
A close below the 10 and 40 day moving averages would turn the near term trend back lower possibly leading to a retest of the 3.740-3.760 weekly lows set over the past month.
A rally and close back above last week’s 4.101 high is needed to turn the longer term trend back up.
Hedge funds are adding to existing long positions in the natural gas market. Last Friday’s Commitment of Trader’s report showed funds long 215,342 contracts (futures only), up 14,505 from the previous week.
Technical Indicators: Moving Average Alignment – Neutral-Bullish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bullish
Crude Oil Technical Update - Retesting Support In Early Trade Today
The market is down in early trade today currently trading just under the 95.00 area. Key support to watch today is former resistance broken last week between 94.35-94.40. If the October contract can hold above this support today, the near term trend will remain up.
If 93.35-93.40 support is broken, the 10 day moving average at 94.05 will become the next support. A close back under the 10 day average will turn the near term trend back down.
Last week’s 96.00 high is the first area of resistance this week followed by the 200 day moving average at 96.45. A close back above the 200 day average would be further confirmation the market has bottomed.
Hedge funds have been steadily liquidating long positions after accumulating a record high position in crude oil of 458,969 contracts in mid-June as the market topped.
The current speculative long position in crude oil is 317,727 contracts (futures only), down 5,746 from the previous week according to the COT report released on Friday.
Technical Indicators: Moving Average Alignment – Neutral
Long Term Trend Following Index – Bearish
Short Term Trend Following Index - Bullish
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